Hyundai Rotem Company to take over Hyundai WIA’s defense business for 360 billion won, bring production of key armaments in-house

[Financial News] Hyundai Rotem Company is acquiring Hyundai WIA’s defense business for 358.4 billion won and will directly produce the main gun, a key armament of the K2 tank. The strategy is to unify production—from tank design and manufacturing to key armaments—to secure both cost competitiveness and supply-chain stability. By also expanding into areas such as gun barrels for K9 self-propelled howitzers and naval guns, the company has laid the groundwork for expanding its tank-centered defense business into the broader artillery sector.
Hyundai Rotem Company disclosed that it decided at a board meeting on the 19th to acquire the operating assets and liabilities of Hyundai WIA’s Special Business Division, its defense division, for 358.386 billion won. The purchase price represents 3.8% of Hyundai Rotem Company’s total assets and 6.1% of its revenue, based on figures at the end of last year.
The deal will be structured as a business transfer, with Hyundai Rotem Company taking over the Special Business Division’s assets, liabilities, workforce and intellectual property, among other things. The division’s total business value was assessed at 480 billion won, but real estate worth 117 billion won, including land and buildings classified as subject to lease arrangements, was excluded from the acquisition. Hyundai Rotem Company said it had sufficient cash on hand as of the third quarter of this year to cover the purchase price.
Hyundai WIA is South Korea’s only specialized manufacturer of large-caliber artillery and produces the 120 mm main gun mounted on the K2 tank and 155 mm gun barrels for K9 self-propelled howitzers. Naval guns for warships and aircraft landing gear are also among its main business areas.
With the acquisition, Hyundai Rotem Company will secure the capacity to produce the K2 tank’s main gun, a key armament, directly, in addition to designing and manufacturing the complete tank. By bringing in-house key components for which it has relied on external suppliers, the company is expected to improve production efficiency and cost competitiveness. The move is also seen as significant because it will secure a stable supply chain for the main gun as K2 tank exports expand in overseas markets, including Poland.
The deal is also expected to expand the company’s business portfolio. By broadening its product range beyond the K2 tank to include gun barrels for K9 self-propelled howitzers and naval guns, it can diversify its previously tank-centered defense business. Analysts say that, at the Hyundai Motor Group level, concentrating defense capabilities currently spread across affiliates at Hyundai Rotem Company could also strengthen business competitiveness.
Hyundai Rotem Company plans to retain all employees of Hyundai WIA’s Special Business Division. Once the acquisition process is complete, it plans to sign a lease for the existing production facilities and establish a separate production process in the future.
Hyundai WIA plans to proceed with the business transfer after a shareholders’ meeting in November. Hyundai Rotem Company aims to complete the deal by March 31 next year, after satisfying conditions precedent, including obtaining approvals from the relevant authorities.
[email protected] Jeong Won-il Reporter